THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

SUZANNE MALVEAUX, CNN ANCHOR: Thanks, Rick. Happening now, powerful Congressman Charlie Rangel is formally accused of 13 serious ethics violations. Now, one lawmaker that says it is nothing less than losing the credibility of the how is that is at stake, is it too late for the Democrat to cut a deal?

Plus, mass arrests of opponents of Arizona's new immigration law. A judge's decision to block key provisions of the measure is generating some relief, some surprise and some fresh outrage.

And former government employee Shirley Sherrod says that she is ready to go to court over the controversy that led to her resignation.

Wolf Blitzer is off today. I'm Suzanne Malveaux, and you're in THE SITUATION ROOM.

In Arizona, right now, no one seems to be satisfied with the status of the state's new immigration law. Just a short while ago Governor Jan Brewer appealed the judge's ruling blocking the most controversial provisions to taking effect today. Now, many opponents of the state's immigration crackdown, they are not celebrating either. Protests took to the streets, police and riot gear carted some of them away. Our national political correspondent Jessica Yellin is in Phoenix. Jessica, set the mood for us here. Obviously this is a very important day for both sides.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: That's right, Suzanne. And tensions are high on both sides on this incredibly hot day here in Phoenix. I have in my hand the appeal the governor just filed challenging the injunction and we have spent the past several hours with hundreds of protesters who have been shouting, shouting and chanting against the government here saying this is in their words legalized white supremacy. This is -- these are their streets, not the streets of foreigners -- I'm sorry, these are their streets. We are the people, they say, and they say don't arrest us. Arrest Sheriff Arpaio. He is the sheriff of Maricopa County. Personally we saw 37 people get arrested very peacefully. Both sides quite calm, in fact, and respectful of the other but passions are high.

One of the questions though that all this raises is given that the injunction did freeze the meat, the most controversial pieces of SB-1070, why did all these protesters still come out? I asked many of them. Here's what some had to say. UNIDENTIFIED FEMALE: We want to make sure that the governor, the president and anybody else involved in this case, especially Sheriff Arpaio, knows we won't rest until we know that this law is completely off the books and then we have a legal path to legalization for people.

UNIDENTIFIED FEMALE: And this is a punitive law that persecutes a third of our population in Arizona.

UNIDENTIFIED FEMALE: Arizona has been in a climate of racism for a long time that is brought upon this very immoral legislation, and we're just here voicing our opinion that this is wrong.

YELLIN: Suzanne, these protesters came from as far away as New York, Massachusetts, New Hampshire and then many from California, and the protests go on. Now they are at the jail, the county jail where so many of these people are now being held. But just to give you a sense of how calm and peaceful it is despite the high tensions, a little story, when women were getting arrested, our camera man heard the police officers ask them would you like your friend to hold your purse, or would you like us to take your purse and we'll give it back to you after your arrest? Everyone knows the role and both sides are being respectful of each other.

MALVEAUX: That's a very interesting story. Personal and emotional for a lot of people on the ground, Jessica, how is this playing out politically?

YELLIN: One of the interesting things I've seen, not just at the protests today where there are hundreds maybe up to a thousand people, throughout the week, there have been voter registration drives at every step of the way, with people from organizations registering specifically Latinos to vote saying that Latinos are under-registered, and there are many who can participate who aren't, and they are signing them up and getting them absentee ballots, making it more likely that they will vote, and they participate in the electoral process, they will have a greater voice, but obviously it has great ramifications for national politics with Latinos a growing population here, and this law, because it's associated with the Republicans, could drive so many Latinos even further into the arms of the Democratic Party. One long-term perhaps unintended consequence we could see play out as a result of this debate. Suzanne?

MALVEAUX: Jessica Yellin, thanks so much.

Now on to Capitol Hill where a veteran power broker, a very powerful man is a step closer to being tried on ethics charges raising the possibility that he could ultimately be booted from Congress. At this hour New York Democrat Charlie Rangel stands accused of 13 violations of ethics and federal regulations. Rangel did not show up at the ethics committee hearing just a short while ago, but earlier he talked about the significance of this day.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Are you still expecting the hearing to go forth today?

REP. CHARLIE RANGEL (D), NEW YORK: 60 years ago I survived a Chinese attack in North Korea, and as a result I wrote a book that having survived that, that I haven't had a bad day since. Today I have to reassess that statement.

(END VIDEO CLIP)

MALVEAUX: Want to bring in our Congressional correspondent Brianna Keilar to talk about how this day has unfolded and played out. Obviously, Brianna, that was quite dramatic when you see Congressman Rangel looking like that, so dejected. This is somebody who we normally see as strong and jovial. What is taking place behind the scenes today?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Yeah, and he's been giving off kind of a positive and confident feel on and off here over the last few days, Suzanne, so certainly a dejected Charles Rangel that we were seeing. What we saw today, it's really about what we're not seeing behind the scenes because that is normally what the ethics committee is completely behind the scenes, and that's what was so intriguing today. This was the first public hearing having to do with this investigation into Charles Rangel. This committee, Republicans and Democrats, coming together and publicly ticking off some of these violations that they have substantial reason to believe Rangel committed. Let's listen to the top Democrat and the top Republican that were in this hearing.

REP. MICHAEL MCCAUL (R), TEXAS: These allegations, if proven, would violate multiple provisions of house rules and federal statutes.

REP. ZOE LOFGREN (D), CHAIRWOMAN ETHICS COMMITTEE: As members of the adjudicatory subcommittee we are neither accusers nor defenders of our colleague Mr. Rangel. Our job is to act impartially as finders of fact and law.

KEILAR: A taste of how this almost trial-like atmosphere went down, but this is something that's also very important that was released today along with this hearing. It's real et source of Congressman Rangel's woes, the statement of alleged violation, and it's more than 40 pages detailing those 13 counts, Suzanne. A lot of them have to do with his raising money for a public policy center at the city college of New York, called the Rangel Center after him. Specifically it says that he solicited donations from companies that were doing business with his committee, the ways and means committee, the tax-writing committee, and it details that he had personal meetings and some really particularly interesting specifics here. It said that he met with one person who ended up donating $500,000 and whose company donated $500,000 to the Rangel Center and then a few months later this same company was talking with his committee, pushing for a special tax loophole. Also, Rangel himself, personally met with a lobbyist for AIG, and the objective of the meeting, according to a memo prepared by the city college of New York, was to get $10 million for the Rangel center, and the it said that specifically Rangel asked AIG at least twice what was necessary to get this done. Also another issue, that he used official letterhead, Suzanne, which is certainly not allowed.

MALVEAUX: Brianna, thank you so much. A lot to digest there. I want to bring in our senior political analyst Gloria Borger. Gloria, this is first time we've seen these charges that have publicly been made aware to everybody.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Right.

MALVEAUX: What do we anticipate in terms of the Democrats who now have to deal with all of this, some who have accepted money from the Congressman, even a few who have started to call for his resignation?

BORGER: Right. The Democrats did not want this. They took power in 2006 with house speaker Nancy Pelosi promising the cleanest house in history, and so now --

MALVEAUX: She said drain the swamp, as a matter of fact.

BORGER: And now you have Charlie Rangel. This is in fact how they got to take over the house in because they accused the Republicans of being corrupt and out of control and you see the tables turned. When you talk to Democrats privately, they say, look, he's given up his chairmanship, that's a big deal. He's no longer chairman of this committee. What they would like him to do very tire and to not fight this, but clearly at this point Charlie Rangel still has some fight left in him.

MALVEAUX: Congressman Rangel has always been a fighter.

BORGER: Certainly.

MALVEAUX: So surprising to see him kind of in that very low dejected.

BORGER: Sad.

MALVEAUX: I've never seen anything like that for him.

BORGER: He's jovial, as you know, and also quite well-liked, I might add, in the Congress among Democrats, but right now, you know, it's each person for himself, as you head into this mid-term election.

MALVEAUX: Do the Republicans feel emboldened like this?

BORGER: Yes.

MALVEAUX: Do they feel like they can make hay out of this in the mid term elections?

BORGER: They absolutely do because Charlie Rangel becomes the poster child for a corrupt Congress. The Democrats have done a bunch to clean up the Congress. They have an outside ethics panel, no more Congressional junkets so they have done a bunch of stuff so this is still going to hurt them.

MALVEAUX: What is it with these house ways and means guys that get into trouble? This is not the first time.

BORGER: Listen, you know, I covered Dan Rostenkowski who did tax reform in 1986. I probably shouldn't admit that but Dan Rostenkowski ended up in jail for a scandal that seems almost a little bit like this, kind of like cash for stamps in the house post office scandal, but I have a trivia question for you.

MALVEAUX: Oh, my.

BORGER: Who was the U.S. attorney who prosecuted Dan Rostenkowski?

MALVEAUX: I'm drawing a blank.

BORGER: Eric Holder.

MALVEAUX: There you go.

BORGER: It all comes full circle. Attorney general.

MALVEAUX: Thank you, Gloria. Appreciate it.

BORGER: Sure.

MALVEAUX: It's been a tense day in Arizona as parts of the new immigration law take effect now. Our law enforcement officers are prepared for all of this. I'm going to ask Pinal County sheriff, Paul Babeu, one of the most vocal supporters of the immigration crackdown.

Plus, we knew that a lot of graves at Arlington National Cemetery may have been mishandled, but the new number being thrown out is pretty astounding.

And it now looks like the controversy that led to Shirley Sherrod's forced resignation will now wind up in court.

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MALVEAUX: It's safe to say that these are not the kinds of images Arizona's tourism board wants America to see. There's unrest that is playing out despite a judge's ruling that blocked key parts of the state's new immigration law from going into effect today. Arizona's governor now is appealing that temporary injunction. I want to bring in a vocal supporter of the immigration law. That is Pinal County sheriff, Paul Babeu. Thank you so much for joining us in THE SITUATION ROOM.

SHERIFF PAUL BABEU, PINAL COUNTY, ARIZONA: Thank you, Suzanne.

MALVEAUX: I want to ask you, this new law takes effect, went into effect today and allows officers to go about their business enforcing the law but does not require them, allow them, to ask about the immigration status of those they have apprehended. We've seen a lot of protests spilling out to the streets. Mostly obviously peaceful, but some arrests. How has the day gone today? BABEU: Actually pretty well. We see a lot fewer folks out there protesting because of the ruling by the judge and this is just one of several legal battles that are to be expected, but for us in law enforcement it doesn't change a whole lot for those of us who enforce the law. Pinal County is not a sanctuary county, but a good part of the law is that it actually outlaws any sanctuary policies that a city or town may have so no longer can there be an internal policy that restricts an officer or deputy from being able to call the border patrol or I.C.E. when they have a situation like that. That's a good aspect and it also criminalizes any human smuggling and transporting illegals or picking them up say for jobs and so forth.

MALVEAUX: So you seem pretty satisfied today that things have gone fairly well. Is that the mood of the officers?

BABEU: Well, in the end, this is not the solution. Even if the entire law was passed and we've been saying this forever is that here the federal government has said in the supremacy clause and inherently this is our job to enforce the immigration laws. We couldn't agree with them more. We just asked president Obama to do his job. We wouldn't even be in this situation today. We're talking about 250,000 that were apprehended by the border patrol and by their own estimates it's over 600,000, so we don't even know who the rest of these people are that are coming in here.

MALVEAUX: Sheriff, what about the president? He has given a hand on the border. He has pledged some 1,200 National Guard troops to the U.S.-Mexico border to be deployed, set to deploy August 1st. Is he not helping you out at least?

BABEU: Well, we need 3,000 armed soldiers just in Arizona alone, and to take 1,200 soldiers and divide them among four border states 2,000 miles, you can picture that in your head on a 24/7 operation, it's a half-hearted measure that's certain to fail. I invite the president to come to Arizona himself, separate and apart from his advisers. He's spending the last few days raising millions of dollars for candidates for office. This is a public safety matter and a national security threat when we have people from foreign countries coming in here armed, and now they have promised a second follow-on lawsuit against who, against law enforcement, that waiting for us to either trip up or claim aid saying we're racially profiling which we know people are going to say that because he's even planted that in their heads saying it's an ill advised law and will lead to racial profiling.

MALVEAUX: One of the things you've mentioned and you've talked about as well as those who agree with you has been this idea and notion of crime and dealing with crime, but according to the bureau of justice statistics, we know that violent crime in Arizona is at its lowest since 1976, and we also know at the same time that the illegal immigrant population has doubled in the last decade. How do you square that? How do you justify this when you talk about crime when in fact crime has gone down while the number of illegal aliens has increased?

BABEU: Well, the number of illegal aliens has decreased, and I was part of that mission under President Bush, and I was deployed as a tactical commander in Yuma where we reduced the illegal immigration in that sector by 95 percent. There were 134,000, and now there's just over 7,000 in direct support of our border patrol so with the numbers falling dramatically, the reverse is true when you look at the percentage of those illegals who have a criminal record already established in Arizona. It uses to be only 8 percent. Now it's 17 percent, so the volume of illegals has dipped but the volume of criminals as a part of that is still very high, and in our county, we have seen homicide last year double in the first half of the year. We have seen just in the past six months indicators of violence that haven't been captured in years prior, pursuits. We had one of my deputies that was ambushed by a squad side element of drug cartel members 80 miles north of the border. We had cartel members killed likely by other cartel members just south of phoenix. This didn't happen before and the uniformed crime statistics aren't reported until the following year

MALVEAUX: I know we'll have to continue this debate another time.

BABEU: You bet.

MALVEAUX: A lot going on with the border and your state. Appreciate your time on THE SITUATION ROOM.

BABEU: Thank you.

MALVEAUX: Thank you very much.

A mother accused of killing her own newborn son not once but eight times. We are learning new details of a very disturbing case.

Also, outrage over BP's plan to write off part of the cost of the gulf coast disaster. It is legal but is it right and plans to permanently seal the well in the coming days? What's going on? We'll ask national incident commander Thad Allen. He's been standing by, and he'll join us live.

(COMMERCIAL BREAK)

MALVEAUX: Lisa Sylvester is monitoring some of the other top stories coming into THE SITUATION ROOM right now. Hi, Lisa. What are you working on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, there, Suzanne. A very disturbing story. French prosecutors are charging a woman with murder after having smothered eight babies over 17 years. It's described that the woman who is overweight hid the pregnancies from her husband. The charges came to light after two dead infants wrapped in a plastic bag were found in the yard.

At Arlington National Cemetery there may be more mislabeled graves than originally thought. Cemetery management admitted errors with 211 plots. Democratic Senator Claire McCaskill of Missouri said the figure may be closer to 6,600 graves during a Senate subcommittee hearing today. An inspector general's report reveals poor cemetery management with little oversight.

SEN. JON TESTER (D), MONTANA: Here's the upshot of this. The upshot of this is I've got a lady who works for me and does my natural resource work in the state of Montana. Actually was out here and was raised in this neck of the woods and her father was buried in Arlington cemetery a couple years ago. Her mom is still alive. She's out here this week and calls up her mother and says I think I'm going to go over and visit dad's grave in Arlington to which her mother's response was do we really know if he's in that grave? This is a true story.

SYLVESTER: The army secretary says corrective measures could include exhuming graves for identification by casket, mementos or DNA.

Exxon Mobil is reporting big quarterly earnings. Profits for the energy giant nearly doubled in the same quarter compared to the same last year. Exxon Mobil netted more than $7.5 billion. The CEO attributes the gains to increased oil production, improved profitability in refining and a strong performance by the company's chemical business. Suzanne?

MALVEAUX: Okay. Thank you, Lisa.

President Obama is talking today about race and the Shirley Sherrod controversy. Did he satisfy critics who say he's bungled the issue? And the president's point man in the gulf, Thad Allen, tells us just how close crews are to a permanent solution to the oil spill.

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MALVEAUX: You are in THE SITUATION ROOM.

Happening now, top pentagon officials voiced their outrage over the leak of thousands of documents about the Afghan war saying whoever did it, they already have the blood of a U.S. soldier on their hands.

Plus, an oil spill in a Michigan river is now posing a toxic health threat to humans. Dozens of homes are now being evacuated.

Wolf Blitzer is off today. I'm Suzanne Malveaux, and you're in THE SITUATION ROOM.

President Obama says many people are to blame for the fiasco that led to Shirley Sherrod's resignation from the agriculture department, and now we know that Sherrod plans to sue one of them. She told the national association of black journalists at their convention that it would be the conservative blogger Andrew Breitbart. He posted a video clip of Sherrod that was edited out of context reportedly to try to portray her as a racist.

SHIRLEY SHERROD, FORMER AGRICULTURE DEPT. EMPLOYEE: I wish he had come here today, because I really would like to talk to him. He, Andrew Breitbart, and Don has been trying to help me say his name each time because I keep forgetting, but he had to know that he was targeting me. Now whether he was also trying to target the NAACP, he had to know that he was targeting me, and at this point, you know, he hasn't apologized. I don't want it at this point. He'll definitely hear from me.

MALVEAUX: No immediate response from Breitbart. President Obama says the attempt to label Sherrod as a racist was bogus. He spoke about the controversy to the national urban league today.

PRES. BARACK OBAMA (D), UNITED STATES: Now, many are to blame for the reaction and overreaction that followed these comments, including my own administration and what I said to Shirley is the full story that she was trying to tell, a story about overcoming our own biases and recognizing ourselves and folks who on the surface seem different, is exactly the kind of story we need to hear in America.

MALVEAUX: It's been a week since the president called Sherrod to express his regret over what happened. Sherrod says she still has not decided whether to accept the administration's offer to rehire her.

In the gulf right now, plans are in the works to move beyond the emergency response operation. Once a final solution to the oil spill is complete. I want to bring in the president's point man in the disaster, retired coast guard Admiral Thad Allen. Thanks for being with us. Obviously there's a significant development today, some good news. Tell us what this means, the relief well now reaching its target.

ADM. THAD ALLEN (RET.), NATIONAL INCIDENT COMMANDER: Well, they are lay being the final pipe casing right now, Suzanne, and when they do that and get it cemented in they will go with a static kill. That will happen late Sunday or Monday. They will put mud down the top of the well that's heavier than the oil that's there right now and hopefully fill the well up. We'll still need to drill in from the bottom and kill the well from the bottom but at this point it looks like we'll be able to move ahead. We've got good well integrity and trying to move forward it's a positive turn.

MALVEAUX: Does this mean this will be completely capped and sealed, that we're now at final stage of resolving this?

ALLEN: Suzanne, it will take both the static kill from the top which will fill the well pipe itself and drilling in from the bottom and filling it from the bottom up and filling it with cement which will finally plug the well and when that happens we'll announce that the well has officially been killed, yes.

MALVEAUX: How soon do you think that will happen?

ALLEN: We originally said Monday for the static kill, the top part. BP indicated they might move that to Sunday night. We're watching that very closely. It will probably be five to seven days after that that they can drill from the bottom. Still another 100 feet to go on the relief well.

MALVEAUX: And are you confident that this is going to work?

ALLEN: Suzanne, this is not a novel type of technology. Intercept wells are drilled routinely. It is novel at the depth that we're at and the intercept wells, you know, at the extreme depths that we're at but this is not new technology. Our science team in Houston, working with the BP engineers, had external validation and we're optimistic we'll be able to do this.

MALVEAUX: Despite the fact that it's not new and you are optimistic, are there risks involved? Is there a chance something could go wrong in the next five days?

Well, I think the first thing we're going to be concerned about when we put the mud down the top of the well, if there's a precipitous drop in pressure that would indicate we've got a problem with the well casing or wellbore, that would be significant, not something we couldn't overcome on the bottom kill. But otherwise if we kill the well and bring it to zero pressure, this will enhance our ability to kill it from the bottom finally.

MALVEAUX: Explain to us, a lot of people are asking this question, and it seems to be a mystery really as to where all the well -- all the oil is, the fact that we can't see the oil anymore, that, of course, you've skimmed it and captured it, but there's a lot of oil that was there before that we just -- we don't see anymore. Has it been dispersed? Has it been eaten by bacteria? Is it underwater being hidden? What has happened to all that oil?

ALLEN: Well, Suzanne, first of all, we've launched the largest response to oil on the surface in the history of this country, and we had an armada of skimming vessels out there, 40 to 50 a day, especially when the well was uncapped. That said, we've been very aggressive on in situ burning. Some dispersed with chemicals, a lot of operation and we're trying to judge right now the metabolic ability of the gulf to really absorb this stuff through biodegradation. We're working through an oil budget where we're trying to estimate the total flow and then subtract out what we know we removed and try to come up with an approximation and that's being worked on by the science team because we do need to know if it's subsurface. Not a lot of oil on the surface right now but we're still getting tar balls and mats and patties that are coming up in southwest Louisiana. I'm in Venice.

MALVEAUX: Bottom line, we still really don't know at this time where that oil might be or how much of it has disappeared?

ALLEN: I think we're going to get a good idea when we're able to put this all in and kind of calculate what we think we're able to recover. It's a work in progress and some of the best minds in the country are working on it right now. I would caution in the meantime, just like a race, we need to run through the tape. We need all our equipment out there looking for oil. Even four to six weeks after this well is finally killed, we can expect there's still going to be impacts because it took that long for it to reach shore when the well was initially open

MALVEAUX: Thank you so much.

There is a new reason lawmakers are angry at BP. Ahead, should the company be able to write off the costs from the oil disaster?

And a Democratic house candidate wants voters to judge him in part on his race, but the president isn't going along with the strategy.

And a messy close call for the international space station.

(COMMERCIAL BREAK)

MALVEAUX: More now on the gulf oil disaster and demands for payback from BP. A new target of outrage now is the company's plan to write off billions of dollars of costs related to the spill. Our Lisa Sylvester is looking into that. I know it's not illegal, but a lot of people are thinking wait a minute is this fair?

LISA SYLVESTER, CNN CORRESPONDENT: Definitely raising some eyebrows. We know that BP is paying billions for the gulf oil spill, but the question is should it be able to write off these expenses? That would effectively lower their overall tax bill and in fact it could mean that the company could pay zero dollars in taxes this year. That's obviously good for BP, but one Congressional critic says that's not a good deal for the taxpayer.

(BEGIN VIDEOTAPE)

SYLVESTER: BP is tallying its cost of the oil spill to be $32 billion, the amount the company is taking as a pre-tax charge to cover cleanup costs over the next few years, a hefty amount. But BP is planning to offset a third of that as a tax write-off. Florida Senator Bill Nelson, firing off a letter to his colleagues on the Senate finance committee, says he's appalled that, quote, BP intends to shift nearly $10 billion of the costs related to the gulf oil spill to the backs of the American taxpayers. Last year BP paid $10.5 billion in taxes worldwide.

SEN. BILL NELSON (D), FLORIDA: It's unacceptable to have the taxpayers bear the burden of $10 billion as a result of the negligence of BP, and for them to be able to write off as deductible expenses $32 billion, which is going to give them a $10 billion tax break, that's just simply not playing fair with the American people.

SYLVESTER: But what BP is doing is perfectly legal. BP can't write off any fines or penalties assessed by the government, but the $20 billion BP set aside in an escrow fund, plus additional costs of containing the spill, are all fair game. In a statement to CNN, a spokesman said, "BP is following the U.S. tax code with respect to the income tax treatment of costs associated with the MC-252 incident. Taxes are paid on profits, and the Gulf of Mexico spill response costs have reduced BP's U.S. profits, so it follows that our tax obligations will be lower as well. But that hasn't blunted the outrage. The watchdog group, the Project on Government Oversight, accuses BP of exploiting the tax code.

MANDY SMITHBERGER, PROJECT ON GOVERNMENT OVERSIGHT: What BP has done in the gulf has been very costly to the nation, and I think that you're looking at them avoiding accountability and really paying everything that they owe to taxpayers for the damage that they have done.

(END VIDEOTAPE) SYLVESTER: Senator Bill Nelson is calling for Congressional inquiry. He hopes to close any loopholes in tax law, and he acknowledges that it may be difficult getting any tax changes to apply retroactively to BP, but in his words he wants people to know all about this and he wants to make a big stink about this. Suzanne?

MALVEAUX: I'm sure a lot of people will be paying attention to that story. Thank you, Lisa.

A hot button issue getting hotter in recent days. Now President Obama is speaking out about race in America. We'll hear what he's saying about it and then talk about it with Roland Martin and John Avlon in our strategy session.

Plus pentagon outrage at the leak of Afghan war documents. Is there too much access to classified documents? We're going to explore that question.

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MALVEAUX: President Obama confronting race head on. We're going to talk about that and much, much more with our CNN political contributors Roland Martin and John Avlon, senior political analyst for thedailybeast.com. Thanks for joining us today.

ROLAND MARTIN, CNN POLITICAL CONTRIBUTOR: Glad to be here.

MALVEAUX: I want you to listen to President Obama before the Urban League today and his take on race and the Shirley Sherrod controversy.

(BEGIN VIDEO CLIP)

OBAMA: We should all make more of an effort to discuss with one another in a truthful and mature and responsible way the divides that still exist, the discrimination that is still out there, the prejudices that still hold us back.

(END VIDEO CLIP)

MALVEAUX: I don't think we have audio on this. Let me read to you what he said. He said we should all make more of an effort to discuss with one another in a truthful and mature and responsible way the divides that still exist, the discrimination that is still out there, the prejudice that still holds us back. He went on to talk about the fact that this is the kind of discussion we should be having in our churches, at the water cooler, in our schools. Does this satisfy the critics who say, you know what, President Obama does not really address the issue of race in a real meaningful way? John, let's start with you.

JON AVLON, CNN POLITICAL CONTRIBUTOR: Well, I think that President Obama does, but, you know, he's able to be in a unique position in American history to not only talk about it but he embodies the changes going on in this country and he has led in the dialogue at certain points, the Philadelphia speech in his campaign being one of the most thoughtful and detail analysis and discussions of race that we've had. I think he's led just by the mere fact of being president, led a discussion in this country and an evolution in this country beyond some of our oldest demons and divides in this future which is a fundamental diverse nation.

MARTIN: Suzanne, I believe --

MALVEAUX: Go ahead.

MARTIN: Sure, go ahead.

MALVEAUX: Obviously he talks about it in a setting he's comfortable with, before the Urban League, a friendly audience in a manner that he feels is thoughtful. Is it -- is it fair the criticism that's been leveled against him, that he doesn't address it at a timely way at a point where it seems people really want him to address it?

MARTIN: Well, a lot of critics want him to do is address the issue of race when it comes to one of these flashpoint discussions. Shirley Sherrod, new black panthers, the race speech and after Reverend Jeremiah Wright, but what I really believe folks is saying is can this president acknowledge the realities of race in everyday life, in these policies, so when you talk about, you know, in terms of the black farmers in Congress, Republicans are blocking the funding of that settlement. That's a race discussion. People are saying when you have a health care conversation, can you talk about disparities as part of the conversation, so I understand what the critics are saying but he is really operating from a policy standpoint. He is right individuals must have these conversations because it impacts us in so many different areas, and a lot of us are afraid to have the real honest conversation black, white, Hispanic, Asian, Native American.

MALVEAUX: Well, the president talked about having a real conversation before the Urban League, and one of the things he addressed was education and the role of parents being involved in their children's education, and he specifically said he sometimes gets in trouble when he's before a black audience and he specifically talks about parents, black parents, also taking responsibility. Here's how -- here's how he put it today.

(BEGIN VIDEO CLIP)

OBAMA: Some people say, well, why are you always talking about parental responsibility in front of black folks? Michelle and I happen to be black parents, so I -- I may -- I may add a little oomph to it when I'm talking to black parents.

(END VIDEO CLIP)

MALVEAUX: John, I notice you're smiling. You're smiling about this, but there's an op-ed from the "Wall Street Journal" real quick that accuses him, saying rather than being a unifier, Mr. Obama has divided Americans on the basis of race, class and partisanship. More over, his cynical approach to governance has encouraged his allies to pursue a similar strategy of racially divisive politics on his behalf. Is it right, is it appropriate for the president to acknowledge that he does have an affinity for the black community, that he does in some ways speak differently, act differently, feeling differently in front of that audience?

AVLON: Of course. I mean, as President Obama joked, he was black before the election. He's going to reflect his unique experiment, as we all do, and the idea that President Obama has tried to cynically divide this nation along racial or partisan lines seems to me itself so cynical. There are people who do try to divide us and people who try to hijack our debates in this country along partisan lines and along racial lines but this particular president is not one of them, and that argument itself seems to me to be just baseless.

MARTIN: Suzanne, the article is a joke because Sarah Palin puts out a video talking about these momma grizzlies, women who are running for office, and so it's unique that a woman can have an open conversation about women leading office, running for office, but an African-American can't talk about being an African-American candidate, and so why is it -- it's okay when it comes to gender, but when it's race it's a approximate and so, you know, I read that op-ed. It makes no sense because they are trying to score a political point when really what you're trying to confront are the realities. We're looking at the fact that in many industries you have no African- Americans. We were talking about "Essence" magazine, the whole issue of a white fashion editor when the industry as a whole won't hire black people. That's a real conversation. Not the flashpoint stuff that gets people excited.

MALVEAUX: Ten seconds, John.

AVLON: And the larger point is he came in with high expectations in a low economy. That is a combustible combination. It means that the effort to transcend them is not an unimportant effort. It should be for all of us to transcend.

MALVEAUX: Thank you, both.

A major corporation is just saying no to profanity. And a frightening reminder about the dangers of space junk.

(COMMERCIAL BREAK)

MALVEAUX: Lisa Sylvester is monitoring some of the other top stories coming into THE SITUATION ROOM. What are you working on, Lisa?

SYLVESTER: Hello, Suzanne. 21 people are dead in Iraq following attacks on police stations and military posts. The violence included suicide bombs and gun fire targeted at Iraqi soldiers and police. Attacks took place north of Baghdad and in neighborhoods around the capital city.

NASA is breathing a sigh of relief. Today, it appear that debris from a Chinese satellite would pass dangerously close to the international space station, but now they say that debris is on a path that will keep it at least five miles away. Astronauts were prepared to take shelter in the aircraft until NASA gave the all-clear. And investment bank Goldman Sachs is cleaning up. The "Wall Street Journal" reports a new company policy now bans profanity in all electronic messages. It has not gone as far as pulling out the bars of soap yet, but software will screen for colorful language and even curse words spelled with asterisks are curses. Employee e-mails have been a sensitive subject for Goldman since the S.E.C. sued them for investment fraud last spring. Of course, we don't have that problem here at CNN, because it is all perfectly clean.

MALVEAUX: And rated g around here. Right, Lisa? OK. Thanks.

Well, the pentagon brass is opening fire over the leak of the Afghanistan war logs. They are warning that someone may have blood on their hands.

And a congressional primary contest.

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MALVEAUX: A congressional primary contest in Tennessee is driving home the difficult balancing about for many Democrats on matters of race. Here is CNN's Don Lemon.

(BEGIN VIDEOTAPE)

DON LEMON, CNN CORRESPONDENT: Here in the city where Dr. King died promoting the importance of the content of one's character, 42 years after his assassination, the African-American candidate in the race is hoping voters will judge him in part on the color of his skin. Sunday in Memphis -- praise and worship for the faithful. A captive audience for Dr. Willie Herenton and Steve Cohen both campaigning for Tennessee's heavily Democratic ninth Congressional seat. Cohen is the incumbent Congressman and Herenton is gunning for his job.

WILLIE HERENTON (D), TENNESSEE CONG. CANDIDATE: Are you going to vote for me? You got me covered? All right. Okay. Baby, I love you now.

LEMON: The man who was Memphis mayor for two decades is making race a key part of the platform. The main campaign slogan on yard signs and flyers, just one. He believes that there should be at least one African-American from the state of Tennessee in Congress.

HERENTON: When you look at this picture, it is of one race. It is as if only white people live in the great state of Tennessee. I believe it is very clear to majority of the citizens of this community that we lack representation.

LEMON: But the Congressional Black Caucus is looking beyond race and is backing Herenton's white Jewish opponent. Even the first African-American president is not supporting Herenton. Obama issued a rare endorsement; called Cohen, the two-term incumbent, a proven leader.

HERENTON: I am disappointed that the president intervened. This is a local race. A local race that the citizens of this community should determine.

LEMON: Herenton is downplaying the endorsement instead drawing attention to Cohen's singing and dancing at campaign events saying Cohen is pandering and "trying to act black." Does it bother you, your opponent talking about race so much saying that you are trying to be black? What do you think of that?

REP. STEVE COHEN (D), TENNESSEE: Well, you know, it is something that he does, and I think that it is grasping. I don't try to be black there is no way and I understand the black community probably better than most Caucasians do, because I spent so much time working on issues.

UNIDENTIFIED FEMALE: You have done so much for this district.

UNIDENTIFIED FEMALE: I really would like to thank you.

LEMON: And on the campaign trail, many of the Congressman's constituents say that his commitment on health care and education resonate more with voters than skin color.

COHEN: I represent everybody and I work hard for people to give them opportunities, and I just think that race should not be an issue in 2010.

LEMON: Steve Cohen appears to have all the momentum, the support of the Congressional Black Caucus, a critical endorsement from President Obama. He has the black vote in Washington. Question is, does he have it here, at home?